Protective Provisions
Definition
Protective Provisions: Protective provisions give investors veto power over certain company actions, such as selling the company, raising more money, changing the charter, or taking on significant debt. They protect investor interests from founder decisions that could harm their investment.
Example Usage
“We needed investor approval under our protective provisions before we could accept the acquisition offer.”
Common Misconceptions
Related Terms
Term Sheet
A term sheet is a non-binding document outlining the key terms of a proposed investment, including valuation, investment amount, board composition, li...
Preferred Stock
Preferred stock is a class of ownership with rights superior to common stock, typically held by investors. Preferences usually include liquidation pre...
Board of Directors
The board of directors is a group of individuals elected to represent shareholders and oversee company management. The board approves major decisions,...
Related Tools
Explore More Resources
Browse Tools
Discover 100+ vetted tools for every stage of your startup journey
Explore all toolsBuild Your Stack
Take our personalized quiz to get tool recommendations for your startup
Start the checklistRecommended Reading
Curated books to help you learn, grow, and succeed as a founder
View book recommendationsListen & Learn
Top podcasts covering startups, product, growth, and entrepreneurship
Discover podcastsHelp us improve this definition
See something that could be clearer or more accurate? Let us know.